TH Real Estate

Investor Profile – Issue 94

Having enjoyed a strong performance last year,the big news for 2014 is that Henderson Global Investors has formed a new alliance in the form of a merger with US-Based TIAA-CREF to create TIAA Henderson Real Estate (TH Real Estate). RLI talks to James Darkins, CEO of TH Real Estate and Retail Director Myles White to find out more.

TIAA Henderson Real Estate (TH Real Estate) is an established investment management company with specialisation in real estate equity and debt investing worldwide. With a focus on the retail, office, logistics, debt and multi-family sectors, TH Real Estate emphasizes sustainable practices to protect assets and maximise their value. In the UK, the company currently has two major mixed-use projects online, both in Scotland. Buchanan Galleries is a joint venture with Land Securities that comprises an existing shopping centre anchored by John Lewis; this is being extended to add a further 45,000sq m of retail and leisure, including a cinema, to create a new retail circuit. The new anchor will be M&S and there will be a further 20-25 new retailers, and in the region of 15 catering venues. The other, even larger, redevelopment is St James Quarter in Edinburgh. Originally developed in the 1960s, the centre is being demolished and redeveloped to create one million square feet of retail, a five-star hotel, 200 apartments and a range of leisure uses. Construction is due to commence in 2015, with completion of the main retail element scheduled for 2019 and the hotel and residential elements to follow some 12-18 months later.

“We have offices in Singapore, Beijing and Sydney, and TIAA has completed its first investments in Singapore and Australia, so it’s a market in which we have huge ambition.”

James Darkins, CEO, TH Real Estate

Other smaller-scale projects across Europe include the recently-opened second phase of Barberino Outlet Mall in Florence, which adds over 5,000sq m GLA, bringing the total amount of retail space at the centre to around 27,000sq m, with 130 stores; and the recently refurbished Metropolis Shopping Centre in Coseza, Italy, an $8M refurbishment creating 12 new prime retail units. On the corporate side though, the big news for 2014 has definitely been the launch of TH Real Estate which will manage some $22.6bn of real estate assets across around 50 funds and mandates. The alliance creates a strong platform across North America and Europe, with high expectations for Asia Pacific.


FORGING NEW ALLIANCES

TH Real Estate is the largest real estate investment manager investing in designer outlet malls both in continental Europe and in the UK and has developed enviable skills and relationships. Now, having completed the 41,000sq m Florentia Village – Jingjin Designer Outlet, located between Beijing and Tianjin, the company is taking further steps in the Chinese market with two new schemes, Florentia Village Guangzhou and Florentia Village Shanghai – both acquired in 2013. “We view China as a really interesting market; you have to fundamentally believe that the world’s second largest economy is going to keep on growing,” says Darkins. “China is a market that you really need to spend time getting to understand and know; it is such a vast country with unique idiosyncrasies in each of its sub-markets.”

“For the last 12 months we have been focused very much on two parallel tracks; the first has seen me focusing on the creation of this new joint venture business in preparation for its 1 April launch.”

James Darkins, CEO, TH Real Estate

Having opened a new office in the country last year, TH Real Estate’s Swedish business is doing well, having secured a prestigious mandate to manage two large retail assets on behalf of one of the largest Swedish pension funds in the country. The portfolio (valued at around $98.7M) comprises of the shopping centres Vågen and Krämaren in Örebro. The company’s preferred target markets in Europe are those where prime rental growth is emerging in response to low levels of development and where the underlying economy is conducive to improving occupier demand, namely London, Stockholm, Munich, and Hamburg. “Capital values have risen sharply within prime core European markets and more investors are now searching for more value within second tier cities,” explains Darkins. “Opportunities persist in southern European markets as prime capital and rental values are yet to recover, providing scope for lower yields. The rental recovery however will lag in non-core countries and a focus on prime assets is recommended in these cyclical markets.”


For the full article, please see the April 2013 issue or subscribe here